French financial services company Crédit Agricole has signed a memorandum of understanding (MOU) with Spanish bank Santander to combine and create a new custody and asset servicing business.
The deal will combine Crédit Agricole’s custody and asset servicing business CACEIS and the Spanish, Brazilian, Mexican and Colombian activities of S3, the counterpart at Santander.
The combined business will have €3.3 trillion in assets under custody and €1.8 trillion in assets under administration.
The transaction would include 100% sale of S3 Spain and 49.99% of S3’s operations in Latin America to CACEIS. It will result in Crédit Agricole and Santander holding 69.5% and 30.5% stakes, respectively in CACEIS. The Latin American operations of S3 will be jointly controlled by CACEIS and Santander.
The combined operation is expected to deliver larger scale and stronger competitive positioning. It is expected to benefit from the enhanced geographical presence, the coverage in value chain and expanded offering for existing and new clients.
Santander executive chairman Ana Botín said: “We are delighted to enter into this partnership with Crédit Agricole.
“S3 and CACEIS are highly complementary businesses, and by working together we can create a custody and asset servicing platform that leverages our collective scale and global presence, and offers clients a comprehensive service that can support their ambitions and help them to prosper.”
Crédit Agricole CEO Philippe Brassac said: “The contemplated combination of CACEIS and S3 is yet another illustration of Crédit Agricole’s continued focus on delivering a strong industrial partnership model with a view to creating outstanding platforms across our key business lines.
“We are very proud to envisage this long-term collaboration with Santander in order to create a major player in custody and asset servicing with further growth prospects for the group.”
The new business will leverage on strong teams from both the organizations with CACEIS CEO Jean-Francois Abadie, continuing his role in the new entity and S3 present general manager Carlos Rodriguez de Robles, leading the Spanish and Latin American operations.
The final agreements will be signed after consulting the relevant works councils. The transaction is subject to customary closing conditions, including regulatory approvals and is expected to take place by the end of this year.